Housing market cools during Spring Festival

Updated 2017-02-03 09:57:28 Global Times

Transacted floor space may drop 10% in 2017: expert

The nation's property market cooled during the weeklong Spring Festival holidays, reflecting a normal holiday slowdown and concerns over the direction of home prices. Experts said real estate transactions in some key first- and second-tier cities will decrease in 2017 because of home purchase limits.

New home transactions in Shenzhen, South China's Guangdong Province, dropped 23.6 percent month-on-month to 1,652 in January and housing prices slid 0.03 percent to 54,931 yuan (,987) per square meter, the latest data from the Urban Planning, Land & Resources Commission of Shenzhen Municipality showed.

The drop in transactions is normal, as it's an off-season for the housing market and consumers are taking a wait-and-see stance over concerns that housing prices may drop, said Yan Yuejin, research director of the E-house China R&D Institute.

Also during the holidays, which ran from January 27 to Thursday, other cities such as Ji'nan in East China's Shandong Province saw transactions fall. Sales of homes plunged 74.75 percent week-on-week to 1,128 during the week from January 23 to Sunday, domestic news portal ifeng.com reported Wednesday.

Still, transactions increased in some third- and fourth-tier cities. Media reports said that some consumers who cannot afford apartments in first- and second-tier cities returned to their hometowns and purchased homes during the holidays, which boosted volumes.

Nationwide, contracted sales reached a record high of 9.9 trillion yuan in 2016, increasing 36.2 percent year-on-year. Both volumes and selling prices rose, according to a report Moody's Investors Service sent to the Global Times on January 26.

"However, the growth pace in December 2016 slowed from that seen in the first three quarters of 2016 after the government implemented tightening measures to cool the sector from late September," Moody's Analyst Chris Wong was quoted as saying.

Of the 70 cities monitored by the National Bureau of Statistics, 46 found that new home prices rose month-on-month in December 2016, down from 55 cities in November. Meanwhile, 20 cities saw month-on-month price declines, up from 11 cities a month earlier.

About 20 cities announced curbs on home purchases starting in October 2016 to stabilize their local real estate markets. For example, Zhengzhou, capital of Central China's Henan Province, announced in December that residents without a local hukou (household registration) could not buy a house in the city until they had paid at least two years' income tax or social security contributions.

Given the local governments' tightened controls, Moody's predicted that the property market will experience slower sales growth in 2017.

"We expect nationwide contracted sales in 2017 will be largely flat or will see a slight decline from 2016," Wong said.

Yan from the E-house China R&D Institute forecast in a note sent to the Global Times that transacted floor space in 30 major cities may drop 10 percent this year because of the effect of the local governments' home purchase limits.

With fewer transactions, price growth pace may slow but an across-the-board drop is unlikely, he said, because consumers with inelastic demand will continue to enter the market.

According to Moody's, a significant increase in new supply is not likely in the next six months, given that cumulative national new residential construction starts for 2016 only grew moderately by 8.7 percent year-on-year after two years of consecutive declines.r space may drop 10% in 2017: expert

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